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Credit and Credit Repair

Credit Help for Real Estate Financing: Credit Scores

By Jeanette Joy Fisher

After Bankruptcy Credit Solutions. New 3-Step system shows you how to rebuild your credit, increase your credit score & qualify for loans after bankruptcy!

When you buy real estate, lenders run all of the "big three" credit bureau reports. Each credit reporting agency lists your credit history as supplied to them by the individual lenders and includes governmental records. Each report assigns a credit score number to you. The credit scores reflect your theoretical risk of default to the lending institutions.

Software developed by Fair Isaac and Company generates your "FICO score." Experian uses a system called Fair Isaac Risk Model, a computer program which rates you with a score according to Experian’s information. Equifax bases scores on BEACON programs and TransUnion bases scores on EMPIRICA models.

Your Baseline

You have three credit scores, often called FICO scores, one from each credit bureau. The lender takes the middle score as your baseline. Lenders have different standards, but generally a "C" score is around 500 to 600, a "B" is around 600 to 680, and an "A-" is above 680. Over 700 is the magical number that gets you the attention you desire. If your score is under 500, find someone to privately finance for you or a partner with good credit while you work on improving your score.

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How Lenders Rate You

Credit score Available mortgage financing:

• 720 - 800 Superb! You get what you want
• 700 - 719 Wonderful! You get top rates & terms
• 680 - 699 Good! You get good rates & terms
• 660 - 679 All right. You pay higher costs & rates
• 640 - 659 Okay score if good income
• 620 - 639 Weak. You need good income & some money
• 600 - 619 Poor. Use creative loan broker & pay more loan costs
• 580 - 599 Almost impossible without large down payment
• Under 580 Work on fixing credit without delay

What Does Not Count In Your Credit Score

The scoring model doesn't compute:

• Age & gender
• Race
• Whether you own a home or rent
• Length of time at your current address
• Job or length of employment at your job
• Income
• Education
• Marital status
• Whether or not you've been turned down for credit.

Real estate lenders don't just consider your credit score when you apply for mortgage financing. Understanding your credit score helps you with this one part of your mortgage requirements.

Copyright © 2005 Jeanette J. Fisher - All Rights Reserved.

Professor Jeanette Fisher, author of "Credit Help! Get the Credit You Need to Buy Real Estate," "Doghouse to Dollhouse for Dollars," and other books teaches Real Estate Investing and Design Psychology. For more articles, tips, reports, and newsletters, see http://www.recredithelp.com/

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